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2016 CAFR
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2016 CAFR
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CITY OF ROSEVILLE, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2016 <br />For governmental activities, other post-employment beneiits are liquidated through the general fund. <br />For compensated absences, payments are made from the fund to which the employee is assigned at <br />the time employment ceases. In addition to the general fund, recreation, community development, <br />and all non-major special revenue funds are involved in paying compensated absences. For Insurance <br />claims payables, payments are made from the Worker's Compensation and Risk Management Funds. <br />From time to time, the City has issued Industrial Revenue Bonds to provide financial assistance to <br />private-sector entities for the acquisition and construction of industrial and commercial facilities <br />deemed to be in the public interest. The bonds are secured by the property financed and are payable <br />solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, <br />ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. <br />Neither the City, the State, nor any political subdivision thereof is obligated in any manner for <br />repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying <br />financial statements. As of December 31, 2016, there were eight series of Industrial Revenue Bonds <br />outstanding, with an aggregate principal amount payable of $44.9 million. <br />Note 4 OTHER INFORMATION <br />A. Risk management <br />The City is exposed to various risks of loss related to torts; theft of damage to, and the destruction of <br />assets; errors and omissions; injuries to employees and natural disasters. During the fiscal years of <br />1980 and 1987, the City established a Workers' Compensation Fund and a Risk Management Fund, <br />respectively (internal service funds) to account for and finance its uninsured risks of loss. For the <br />year 2016, the Warker's Compensation Fund provided coverage up to a maximum of $470,000 for <br />each occurrence. The Ciry purchases excess loss coverage from the Workers' Compensation <br />Reinsurance Association, a nonprofit organization established by Minnesota State Statutes. <br />The Risk Management Fund provides comprehensive general liability and comprehensive automotive <br />liability up to the statutory maximum of $1,500,000. The City retains the risk of the first $100,000 of <br />each occunence with an annual maximum exposure of $200,000. Liabilities of the fund ate reported <br />it is probable that a loss has occurred and amount of the loss can be reasonably estimated. <br />Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result <br />of the process to estimate the claims liability is not an exact amount as it depends on many complex <br />factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are <br />reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including <br />frequency and amount of pay-outs), and other economic and social factors. The estimate of the <br />claims liability also includes amounts for incremental claim adjustment expenses related to specific <br />claims and other claim adjustment expenses regardless of whether allocated to specific claiins. <br />Estimated recoveries, for example from salvage or subrogation, are another component of the claims <br />liability estimate. The City purchased commercial insurance for claims in excess of coverage <br />provided by the Risk Management Fund and for all other risks of loss. Settled claims have not <br />
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